Obama is in no mood for fight on debt ceiling

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WASHINGTON With the resolution of the year-end fiscal crisis just hours old, this city is bracing for a fight in February over raising the nation's borrowing limit. But it is a debate that President Barack Obama says he will have nothing more to do with.

Even as Republicans vow to leverage a needed increase in the federal debt limit to make headway on their demands for deep spending cuts, Obama – who reluctantly negotiated a deal like that 18 months ago – says he has no intention of ever getting pulled into another round of charged talks on the issue with Republicans on Capitol Hill.

“I will not have another debate with this Congress over whether or not they should pay the bills that they've already racked up through the laws that they passed,” the president said Tuesday night after he succeeded in pushing Republicans to allow tax increases on wealthy Americans.

The president's position is sure to appeal to some of his allies, who fear another round of compromises by Obama. But economists warn that a standoff could lead to a damaging financial default and doubt from investors about the ability of the country to pay its obligations.

Moody's, the rating agency, warned Wednesday that political battles over the nation's finances could lower the group's rating of U.S. debt.

“We're in for another round of brinkmanship and uncertainty,” said Mark Zandi, the chief economist at Moody's Analytics, who predicted weeks of “angst, discussion and hand-wringing” in Washington. “I don't think the economy can really find its footing and jump to a higher level of growth until we get to the other side of this.”

The financial imperative for an increase in the debt limit comes at a time of increasingly sour relations between the president and his Republican adversaries in the House.

To secure a deal to avert automatic tax increases and spending cuts Jan. 1, Obama was forced into last-minute talks with Sen. Mitch McConnell of Kentucky, the Republican leader, after weeks of negotiations with Speaker John A. Boehner in the House collapsed amid acrimony and internal Republican dissension.

Now, the president and Boehner are both signaling a fresh round of take-it-or-leave it stands that are in sharp opposition: The president says increasing the borrowing limit is non-negotiable, while Republicans say the House is all but certain to pass a bill that raises the debt limit only in exchange for significant cuts.

Obama is counting on help from the business community, given its traditional GOP ties. Recently, for example, the head of the Business Roundtable, John Engler, a Republican and former governor of Michigan, called for extending the debt limit for five years.

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